Saturday 25th Nov 2017 - Logistics & Supply Chain

The European Supply Chain Excellence Awards 2007, Public Sector, Services, Utilities Winner: TNK-BP

This category of entry may appear something of a mixed bag – what unites them is that they all work under constraints – legal or regulatory, and of course that great arbiter, public opinion – that can limit their freedom to operate in quite the way that purely profit-driven organisations can.

Nuon is a renewable energy company, based in Amsterdam and with operations extending into Belgium and Germany. Their entry was notable for its use of benchmarking not just to match, but to outperform the competition, and we considered it more fully in the ”Sourcing and Procurement” category.

Northumbrian Water also offered an entry based on purchasing improvements, which were felt to be basic rather than world-moving, although we liked the attitude that ”purchasing is a strategic department that adds value” and some of the consequent developments, such as income generation from the sale of Renewables Obligation Certificates, rentals from unused office space, and earning fees from providing third-party services to other organisations.

The entry from Compass Group focused on the supply of fresh produce from Southern Spain, through a distribution centre into 12 European countries, providing a service to those countries” secondary distributors, such as Deli XL or Brakes. The problems faced were inevitably those of non-visibility of end to end costs, and the challenge of being just one local buyer in any category against the power of the supermarket chains. This should have been a very interesting entry, but sadly we weren’t able to get enough additional information to progress the entry.

Meadowhall Centre, Sheffield has the contrary problem – that of being a very large entity in a tight geographical area. Its development of a consolidation centre to rationalise movements in both the forward and return logistics cycles, and their extension of this from the Centre’s own retailers to City Centre clients rightly moved the judges to consider it under the Environmental Award.

Group Jacquet, a bakery which is part of the Limagrain Group, offered ”a new approach to supply chain traceability”, claiming to be the first European manufacturer to trace multiple assets with 100 per cent accuracy using unique imaging-based technology”. The reason for their appearing in this category is that it is said this is the best attempt yet fully to comply with the traceability provisions of the EU’s General Food Law, and without the perceived expense of RFID. But whilst technologically and tactically this was impressive, we weren’t seeing much of a link from the supply chain to overall corporate strategy.

Glasgow City Council, in partnership with Kewill, was another procurement-led project, and claims to be one of the largest e-procurement programmes in the public sector. But again, ”It is not clear if it links to an overarching corporate strategy”.

So the winning entry in this category was adjudged to be that from TNK-BP. This is a joint venture/merger of the Russian interests of Russian company TNK and BP, the scale of which is awesome, as is the achievement. TNK-BP has only existed as an entity since 2003; it is in the eye of domestic and international politics; it employs across Russia and the Ukraine, around 71,000 people, spending around €2.8 billion a year, with hundreds of wells and stores locations across European and Asiatic Russia.

One of the commitments to the Russian Government when the joint venture was approved was investment in transfer of both technology and better business practices: with no real heritage in SC management available in Russia, the TNK-BP board commissioned in 2005 a SC Re-engineering Project to ”create world-class processes and systems across the supply chain from the way demand is created to how the warehouses are managed”. Rome wasn’t built in a day, but the sheer scale of transformation achieved so far demanded that TNK-BP be given this Award.

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